International

Trump threatens to pull US out of WTO

US president Donald Trump said he would pull out of the World Trade Organisation if it doesn’t treat the US better, targeting a cornerstone of the international trading system.

“If they don’t shape up, I would withdraw from the WTO,” Trump said Thursday in an Oval Office interview with Bloomberg News. Trump said the agreement establishing the body “was the single worst trade deal ever made.”

A US withdrawal from the WTO potentially would be far more significant for the global economy than even Trump’s growing trade war with China, undermining the post-World War II system that the US helped build.

Trump said last month that the US is at a big disadvantage from being treated “very badly” by the WTO for many years and that the Geneva-based body needs to “change their ways.”

In the Oval Office interview, Trump said at the WTO “we rarely won a lawsuit except for last year.”

“In the last year, we’re starting to win a lot,” he added. “You know why? Because they know if we don’t, I’m out of there.”

For all of his complaints about the WTO, Trump’s administration has continued to file cases against other members. Earlier this week it launched a case against Russian duties on US products that it argues are illegal.

States that bring complaints to the WTO tend to prevail and defendants in trade disputes lose.

But WTO data also shows that the US does slightly better than the WTO average in both cases it brings and that are brought against it, said Simon Lester, a trade analyst at the Cato Institute, a Washington policy group that favors more open international trade.

Of the 54 cases brought by the US over the life of the WTO, Washington won at least one finding in its favour in 49, or 91 percent, Lester said. Of the 80 cases brought against it, a WTO panel had ruled against it in at least one aspect in 69 cases, or 86 percent of the time.

The Trump administration has taken his complaints a step further by arguing that the WTO’s dispute settlement system is broken and in need of a major overhaul.

The EU has been leading an effort to propose reforms to try and defuse the conflict. Officials from the EU and Japan visited Washington last week to discuss potential changes as well as joint efforts to take on China at the WTO.

Since World War II, successive US presidents have led efforts to establish and strengthen global trading rules, arguing that they would bring stability to the world economy.

The WTO was created in 1994 as part of a US-led effort by major economies to create a forum for resolving trade disputes.

Trump also declared that China won’t outlast the US in their trade dispute, and said his administration is re-examining how to determine whether countries are manipulating their currencies.

Trump has repeatedly complained that China manipulates the renminbi, also known as the yuan, a charge that isn’t officially supported by his government. “We are a much stronger country,” Trump said.

“Nobody’s waiting us out. Our country is stronger than it’s ever been financially.” Trump again alleged in an interview with Reuters last week that China was manipulating its currency.

The president’s accusation, presented without explanation or substantiation, conflicts with the findings of his own administration.

The Treasury Department stopped short of naming China, the EU or any other country as a currency manipulator in April, in a semi-annual report on foreign-exchange policy.

“It is a formula,” Trump said Thursday. “And we are looking very strongly at the formula.” He said that China has devalued its currency in response to a recent slowdown in its economic growth.

“They’re trying to make up for lack of business by cutting their currency,” he said. “It’s no good. They can’t do that. That’s not, like, playing on a level playing field.”

The yuan has tumbled 6 per cent over the past three months - making it the worst performer in Asia.